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[ROOT]/includes/bbcode.php on line 112: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead[phpBB Debug] PHP Warning: in file [ROOT]/includes/bbcode.php on line 112: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead[phpBB Debug] PHP Warning: in file [ROOT]/includes/bbcode.php on line 112: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead[phpBB Debug] PHP Warning: in file [ROOT]/includes/bbcode.php on line 112: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead[phpBB Debug] PHP Warning: in file [ROOT]/includes/bbcode.php on line 112: preg_replace(): The /e modifier is no longer supported, use preg_replace_callback instead[phpBB Debug] PHP Warning: in file [ROOT]/includes/functions.php on line 4762: Cannot modify header information - headers already sent by (output started at [ROOT]/includes/functions.php:3897)[phpBB Debug] PHP Warning: in file [ROOT]/includes/functions.php on line 4764: Cannot modify header information - headers already sent by (output started at [ROOT]/includes/functions.php:3897)[phpBB Debug] PHP Warning: in file [ROOT]/includes/functions.php on line 4765: Cannot modify header information - headers already sent by (output started at [ROOT]/includes/functions.php:3897)[phpBB Debug] PHP Warning: in file [ROOT]/includes/functions.php on line 4766: Cannot modify header information - headers already sent by (output started at [ROOT]/includes/functions.php:3897)Seattle Bubble Forum Archive • View topic - red flag for crashing market: rising rents

The other factor not mentioned is how the median rent is distorted by those trying to rent out their condos and houses to cover their high-priced mortagages. Kinda like more high-end sales of SFH's distort the median for all SFH's.

When discussing rent increases, it is important to distingush what types of rentals we are talking about, even at the apartment level. What the rents are for bigger buildings don't correlate with smaller ones. Duplexes/Triplexes don't necessiarily correlate with SFH's. The Dupree and Scott surveys don't include buildings with less than 20 units, and lots of people don't make that distinction. The in-city rentals are also distorted by what I call the overstated "premium" for living within a 30 min. bus trip downtown. Especially those on the North End that lie south of 85th st.

The rents across the board are increasing, that is certainly not in dispute. When they go down is a much a reflection of which rentals go down, and when, as much as the traditional median per capita income, NOT household income. Far more renters are single, than married in-city. IMO, per capita income has more sway than supply and demand in how rents actually play out and are accepted.

Charging a ton for something that is basically a POS is also skewing the stats, IMO, no matter the location.

IMHO and statistically I have seen it been proven is that rents going up comes to a point where per Sq Ft rents are at the same level that a purchase/mortgage of likewise property is, that is when rents start going down as people want the white picket fence to paint once a year in the spring.

Foreclosures that get bought cheap and turned into rentals help put downward pressure, no doubt.

The other issue is investors with houses they thought they would sell but now much carry the mortgage on, after a few months on the market the ideal of being a landlord becomes a lot more acceptable.

People that actually live in their house and don't need to move aren't going to become landlords, true enough. Those that 'investor's, though, have a different set of problems.

I was renting a brand-new house for a lot below the mortgage (out in Snohomish, Train to work). In my neighborhood there are at least 5 rentals (all houses built after 2005) of something like 24 houses. My landlord didn't raise rent over the last 3 years, and across the street someone rented for the same rate a couple months ago. Big apartment buildings with high occupancy rates can raise their rates ok, but investors with a single house take a large risk to raise rates. I'm now moving due to a job, or I'd have stayed for another year paying the same rate. Of course, I've also kept the house in great condition, which is always a plus for not getting your rates jacked.

One has to remember that rents (like the prices for most things) are set on the margin. In other words, only a small percentage of units are on the market at any one time - so when the market is hot, rents blip up a bit, when it is weak - they will trend down.

None of this changes the fundamental underlying linkage between how much money people have (as determined by their income) and how much they can afford to pay for rent. There is no lending standard or interest rate that comes into play here.

I just love the argument from people who say "well, I'm a landlord and my costs are going up, so I'm raising rents!". Maybe. Maybe not. Maybe you will make money, maybe you will lose money.

The core assumption there is that costs somehow determine rents when precisely the opposite is true. The reductio ad absurdum extension of that logic is that I could pay $5mm for a 1 bedroom condo in kirkland and then rent it out to cover my costs. No, smart investors look at what they can get in rent and then decide what they will pay. And when cap rates are 2%, they put their money elsewhere...

Good point Markor. I think I would defend anyone who buys when a 30 year fixed mortgage (including taxes and insurance) is the same or lower than buying. This is cheaper than usual (usually buying will cost a bit more), so even if prices will go down more it's a defensible move. People need to move on with their lives at some point, and bottoms are notoriously difficult to call.

This is something I've been thinking about for the last week or two. Right now, rates are pretty much as good as they're going to get. Once the election is over, the fed will raise because inflation is going to get bad. I would expect rates at this time next year to be at at least 7.5% YOu can get a 30 year fixed right now for 5.5%. Even if the house drops in price, if you buy a house that you're not going to move out of for awhile, you could be hedging against inflation of rents long term even if the property does drop in value more.

Sort of the idea that what you buy your house for is not the sticker price, but the checks you write.